U.S. markets were sharply higher after the largest U.S. aluminum manufacturer said Tuesday after the market close that it earned 10 cents a share in the first quarter against expectations of a four cent a share loss. Alcoa is considered a barometer for the U.S. economy as it sells its aluminum to a wide range of customers.

Alcoa also reaffirmed its forecast of a seven per cent increase in 2012 global aluminum demand and its shares were ahead 8.05 per cent to $10.07 (U.S.) in New York.

North American markets finished lower for a fifth straight session Tuesday, with investors sidelined amid data from China indicating slower growth in imports and exports while Spain saw its 10-year bond yield hit four-month highs of over 5.9 per cent.

But traders have also been nervous about how the first-quarter earnings season will play out.

Analyst expectations for earnings for companies in the Standard & Poor's 500 index went from anticipation of an increase of about three per cent early in the quarter to an expected decline of 0.1 per cent, according to FactSet.

Such a dip would follow three straight years of strong double-digit earnings growth.

“For this cycle, I think we have seen peak earnings, peak profitability,” said Paul Vaillancourt , CEO of Canadian Wealth Management in Calgary.

“But companies are not going to start losing money this quarter, it's just the rate of growth will decelerate. And so you won't see the same quarter over quarter, year over year growth in earnings but that's what happens at this stage in the recovery.”

He said what is important is that the U.S. economic recovery has become self-sustaining “and that's what really matters.”

Tuesday's losses had erased all gains on the TSX for 2012, leaving the main index about 20 points shy of where it started the year.

The European debt crisis continued to be in focus Wednesday as Italy's borrowing costs more than doubled in a couple of bond auctions due to renewed market uncertainty about debt and growth prospects among the 17-country euro zone's weakest members.

The borrowing rates of Italy and other financially shaky countries like Spain had eased in recent months after the European Central Bank gave banks emergency loans and the government of Italian Prime Minister Mario Monti implemented austerity measures.

However, that lending program by the ECB expired at the end of March.

Commodities were mixed after demand concerns sent prices for oil and metals lower on Tuesday.

Copper prices stabilized and were unchanged at $3.65 (U.S.) a pound. Prices for copper, which is viewed as an economic barometer as it is used in so many businesses, have tumbled about seven per cent in the past week amid soft Chinese economic data. But the base metals sector was ahead 2.2 per cent as Teck Resources (TSX:TCK.B) advanced 91 cents to $35.71 (CAN) and HudBay Minerals (TSX:HBM) climbed 22 cents to $10.49.

The industrials sector rose about 1.59 per cent as Canadian National Railways (TSX:CNR) climbed $1.17 to $77.22 while Canadian Pacific Railway (TSX:CP) improved by 89 cents to $74.15.

The May crude contract on the New York Mercantile Exchange gained $1.29 to $102.31 (U.S.) a barrel and the energy sector climbed 1.42 per cent. Suncor Energy (TSX:SU) rose 51 cents to $30.19 (CAN) while Cenovus Energy (TSX:CVE) was up 57 cents to $33.95.

The gold sector was the only decliner, down 0.57 per cent even as gold shed early losses and was unchanged at $1,660.70 (U.S.) an ounce. Barrick Gold Corp. (TSX:ABX) faded 22 cents to $41.49 (CAN) while Kinross Gold Corp. (TSX:K) shed 18 cents to $9.22.

Romania's environment minister says an application by Gabriel Resources Ltd. (TSX:GBU) for permits to move ahead with a controversial gold mine can't be speeded up as requested. Opponents say building the open-pit mine would damage ancient monuments and destroy a mountain face. Gabriel shares dipped nine cents to $3.16.

European markets were positive with London's FTSE 100 index ahead 0.7 per cent, Frankfurt's DAX up 1.16 per cent and the Paris CAC 40 ahead 0.75 per cent.

Markets will be closely watching for first-quarter gross domestic product results, starting with China on Friday. China lowered its GDP growth target last month to 7.5 per cent, sparking concern that the world's second-largest economy is slowing faster than expected.

In Canadian earnings news, Astral Media Inc. (TSX:ACM.A) had a $38.2-million profit in its second quarter, a 10 per cent increase over the same period a year earlier. Revenue rose to $233.5-million from $232.7-million and its shares added a penny to $48.48.

Dollarama Inc. (TSX:DOL) says its net income soared 51 per cent to $63.6-million or 84 cents per diluted share in its fiscal fourth quarter, up from $42-million or 56 cents per share a year earlier. The discount chain's sales jumped 14.7 per cent to $468.7-million. Its shares gained $3.80 to $52.16.

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